Continuing education is a valid tax write-off whether you're self-employed or an employee. However, it must be directly related to your current job. Classes you take for a new field aren't deductible. If you're self-employed, you may be able to write off all the continuing education costs, including transportation. That's not usually an option for employees.
What Costs Qualify
If your continuing education meets the IRS requirements, you can write off the cost of the class. You can also deduct the price of books or other materials and supplies necessary for the course. To qualify for a deduction, you must be taking the class to maintain or improve your job skills, or because the law or your employer require you to take the classes. For example, a lawyer taking continuing legal education or a teacher qualifying to renew his certificate could both write off their school expenses.
In some cases you can write off the cost of business-related travel, including the cost of driving from work or home to your continuing education classes. The IRS allows two methods. With one, you deduct the actual costs. For example, say you spend $2,000 on gas, maintenance and other car costs in a year and 3 percent of your driving was for continuing education classes. That's a $60 write-off. Alternatively, you can take the IRS per-mile rate, which is 57.5 cents at the time of publication. Overnight travel required for continuing education is deductible, as are meals and lodging on the trip. You can only write off 50 percent of meal costs, though.
If your employer reimburses you for any of your costs, you can't write them off. Any remaining unreimbursed expenses are still deductible. If you use any leave time to take the class, the value of your vacation time isn't deductible. Out-of-town travel costs aren't deductible if your visit is primarily for recreation or to see family. The IRS will assess the deduction based on factors such as how much time you spend in class and how much time you spend on non-class or work-related activity.
Taking the Deduction
If you're self-employed, you report the costs of your class as a business expense on Schedule C. Lump the transportation costs in with all your other business travel. If you're an employee, you can only write off the class cost by itemizing deductions. Job education is a 2 percent deduction as of publication, like tax-preparation costs and other unreimbursed employee expenses. Add all your 2 percent deductions together, then subtract 2 percent of your adjusted gross income. Your deduction is whatever is left.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.